Asian Shares Mixed; Tokyo Hit By Yen Strength, Techs Hurt Seoul

ShriNavaratnam

SINGAPORE (MarketWatch) -- Asian stock markets were mixed Thursday despite a solid rebound on Wall Street, as exporters in Tokyo were hurt by a rising yen while earnings concerns for tech firms in South Korea weighed on that market.

Japan's Nikkei Stock Average was down 0.3%, Australia's S&P/ASX 200 was up 0.3%, South Korea's Kospi Composite was off 0.4% and New Zealand's NZX-50 was up 0.4%.

Dow Jones Industrial Average futures were down 14 points in screen trade.

Wall Street's solid rebound on Wednesday, buoyed by a spate of strong earnings from airlines and other bellwethers, provided early impetus in Asia. Receding fears that China's surprise rate hike on Tuesday will dent global growth helped to steady most markets.

However, investors were cautious ahead of a raft of data from China--including third quarter gross domestic product, September inflation and industrial production--due later in the day.

"The market is watching what China is doing on monetary policy but they will be expecting fairly solid economic data," said Macquarie Private Wealth Division Director Martin Lakos in Sydney.

Sydney-based RBS currency strategist Greg Gibbs said the inflation data may be key for markets. "A faster pick up in inflation may increase risk of more rapid tightening in China and unsettle risk appetite."

The Japanese market continued to be hounded by a strong yen, with losses in exporters' stocks offsetting gains in resources-linked plays.

The dollar fell to a fresh 15-year low of Y80.84 on Wednesday, leaving investors fretting about the persistent strength of the yen despite last month's intervention by Japanese authorities to cap the currency's surge. "There is a spreading mood that the Japanese government will not intervene (in foreign exchange market) until the dollar falls below Y80," said Kenichi Hirano, operating officer at Tachibana Securities.

Exporters were weak, with Canon off 0.9%, Sharp off 1.9%, Toshiba off 1.7% and Honda Motor down 0.8%.

In Sydney, materials plays were leading a broad-based recovery in cyclical stocks after the previous session's punishing selloff. BHP Billiton was up 0.7%, Rio Tinto added 1.1% and Newcrest Mining tacked on 1.5%. "Obviously the U.S. market is focusing on improved U.S. corporate earnings although there are still a few negatives, like the mortgage bond issue affecting Bank of America," Macquarie's Lakos said. "Who knows how the mortgage foreclosure crisis will pan out, but the market clearly doesn't view it as a systemic problem at this stage."

Wesfarmers was among the top performers, advancing 2.6% after its Coles supermarkets' comparable food & liquor sales rose 6.2% in the first quarter.

The South Korean market was hit by concerns about the earnings outlooks for key technology stocks after Samsung Electronics' recent downbeat third quarter guidance.

"Investors, disappointed by Samsung Electronics' weaker-than-expected (third quarter) guidance, seem to find no reason to buy technology stocks as major IT companies such as Hynix and LG Display have yet to come up with their quarterly results," said Lee Kyoung-min at Woori Investment & Securities.

Hana Financial Group fell 6.2% after Singapore state-owned investment company Temasek Holdings sold its entire 9.6% stake in the firm at KRW33,400 per share, a 6.0% discount to Hana Financial's closing price on Wednesday.

A Hana Financial official said late Wednesday that Temasek had informed Hana of its intent to sell down its stake in the firm as it began divesting from various financial institutions in the wake of the global financial crisis.

Shares in New Zealand were modestly higher as investors took comfort from improved sentiment in global markets. Index heavyweights provided support, with Fletcher Building up 1.0%, Telecom 0.5% higher and Contact Energy up 0.6%.

Coal producer Pike River Coal fell 1.0%, extending its fall following the company's downgrading of coal production forecasts.

In foreign exchange markets, renewed selling kept the U.S. dollar on the defensive after a brief rally for the greenback that was spurred by fears that China's hike could slow the global recovery.

Traders said investors now see China's rate hike as a signal of strength.

"A perception that China's rate hike won't undermine growth contributed the unwinding of the prior risk off move that had boosted the U.S. dollar," RBC capital Markets said in a note to clients.

"The uncertainty, not of (quantitative easing) itself, but of how far the (U.S. Federal Reserve) might go and how aggressive they will be still has the ability to undermine support for the U.S. dollar," it added.

The raft of China data later in the day and the Group of 20 finance ministers' meeting this weekend will also be focal points for currency traders, analysts said.

The euro was fetching $1.3955 against the dollar, from $1.3949 late Wednesday in New York, and at Y113.17 against the yen, from Y113.25. The dollar was buying Y81.08, compared with Y81.16.

Lead December Japanese government bond futures were flat at 143.64 points as investors awaited the Ministry of Finance's Y1.1 trillion sale of 20-year bonds later in the day. The 10-year cash JGB yield was also steady at 0.890%.

Spot gold was up $2.00 at $1,348.10 per troy ounce from the New York close on Wednesday.

December Nymex crude oil futures were up 16 cents at $82.70 per barrel on Globex.

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